The news led to a sell-off in shares in pre-market trading on Wall Street on Friday.
CEO Hock Tan told investors on Thursday the decline was due to a “compression of [the] supply chain,” along with the broader trade dispute between the U.S. and China, including the Huawei ban.
“The uncertainty of the environment has put in place a concern about placing additional orders and actively a reduction of inventory out there,” he said on the firm’s second-quarter earnings call. “Demand volatility has increased and our customers are actively reducing inventory levels to manage risk.”
Tan said the company made $900 million in revenue from Huawei last fiscal year, less than 5 percent of its total sales. Huawei orders began to decline in the third quarter of 2018, he told investors.
San Jose, California-based Broadcom was one of the first major chip makers to announce earnings after Trump signed the executive order launching the Huawei ban, and the firm’s results are already filtering through the industry.
|MU||MICRON TECHNOLOGY INC.||33.38||+0.42||+1.27%|
|AMD||ADVANCED MICRO DEVICES INC.||31.39||-0.79||-2.45%|
The forecast sent shares of fellow semiconductor firms — like Micron Technology Inc. and Advanced Micro Devices, Inc. — down in futures trading on Friday.
Alongside Broadcom, Qorvo Inc. and Lumentum Holdings Inc. also reduced their revenue outlook following the Huawei ban.